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GM, Chrysler Set for More Buyouts

General Motors sources said on Feb. 2 the troubled auto giant is planning a new buyout program to further reduce the size of its blue-collar workforce. The news came after Chrysler announced it planned to offer a new round of buyouts to all of its blue-collar workers as the industry braced for further troubles ahead.

GM spokesman Tom Wilkinson said he could not confirm the buyout. GM's current contract with the United Auto Workers allows the company, with the union's consent, to offer buyouts if business conditions warrant cutbacks.

GM president Fritz Henderson has said sales declined again in February and GM was preparing for a year in which sales dropped to around 10.5 million units, the lowest level since the end of World War II after numbers are adjusted for population.

GM sources confirmed the buyout would go forward this week. "We just have to notify the employees," one person familiar with the action said.

As in the past, employees will be offered cash and a vehicle buyout to sign away their jobs. The buyouts also are expected to be part of the viability plan GM must submit to the U.S. Treasury, which has provided a multi-billion-dollar emergency loan. The preliminary plan is due February 17 and the final plan is due March 31.

GM has received $9.4 billion from the Treasury to avert collapse, including $5.4 billion on January 21.

Chrysler, the number three U.S. automaker, said it had been set to make its buyout offer in December and January, under an agreement with the United Auto Workers Union. But because Chrysler had suspended production for extended periods in December and January, the program offerings are being rolled out now, a spokeswoman said.

Chrysler workers have until February 25 to decided whether to accept the buyouts, which include up to $75,000 cash and $25,000 to buy a vehicle if they leave the company without retiring. The incentive for early retirement is $50,000 in cash and a $25,000 voucher.

The struggling company is under intense financial pressure and needs help from both the U.S. Treasury and from a planned alliance with Italian automaker Fiat if it is to survive, analysts said. The Treasury awarded the company four billion dollars with the remaining three billion to be distributed pending the interim review of Chrysler's viability plan on February 17, and a final review on March 31.